1.1 Petroleum Economics Intro
1.1 Petroleum Economics Intro
1.1 Petroleum Economics Intro
By Dr. IMS
Acknowledgement: Elias Abllah
PROJECT
(Sources of Funds)
Re-investment
DEBTHOLDERS
Debt Repayment
Bank loans Interest Payment
SHAREHOLDERS
Dividends Payment
Share issue
Farm-out
ECONOMIC ANALYSIS WORK-FLOW
Economic
Assumptions
Risk &
Price
Cost Escalation
Sensitivity
Inflation Analysis
Exchange Rate
ECONOMIC ANALYSIS WORK-FLOW
Economic
Assumptions
Risk &
Price
Cost Escalation
Sensitivity
Inflation Analysis
Exchange Rate
OVERVIEW OF UPSTREAM PROJECT EVALUATION
Data Review
Seismic/Drilling/Studies
Project Screening
Project Planning
Detailed Design
Procurement
Fabrication/Installation
Drilling
Revisit/New Opportunities
Contract Years
OVERVIEW OF UPSTREAM PROJECT EVALUATION
Project Costs
Exploration seismic, G&G, exploration well, etc.
Development Study, production facilities, pipeline, development wells, base
camp, roads, etc.
Production maintenance, workover, manpower, etc.
Abandonment decommissioning.
OVERVIEW OF UPSTREAM PROJECT EVALUATION
60
Build-up Plateau Decline
Period Period Period
50
40
Production
30
20
10
0
Production Year
OVERVIEW OF UPSTREAM PROJECT EVALUATION
Production
Period
= 50 MMSTB
Exploration Development
Period Period
Surplus
Opex
Developm ent Capex
Exploration Capex
Unit Finding Cost (UFC) = Exploration Capex / Total Production = $ 10/50MMSTB = $0.20/BBL
Unit Development Cost (UDC) = Development Capex / Total Production = $260/50MMSTB = $5.20/BBL
Unit Operating Cost (UOC) = Total Opex / Total Production = $ 50/50MMSTB = $1.00/BBL
Unit Technical Cost (UTC) = [Total Capex + Total Opex ] / Total Production
= UFC + UDC + UOC = $0.20 +$5.20 + $1.00 = $6.40/BBL
Thank You